Enterprises’ Incentives, Audit Tactics And Voluntarily Internal Control Attestation Report

Our country started to require the main board of Shanghai andShenzhen Stock Exchange to disclose the internal control attestationreport strongly from January1,2012, and he required the Small andMedium Enterprise Board and the ChiNext to disclose the internal controlattestation report voluntarily. But in practice there is phenomenon thatsome companies disclose their internal control attestation reportvoluntarily. Based on the unique system about the Small and MediumEnterprise Board and the ChiNext of Shenzhen Stock Exchange, we findthe reason of the internal control attestation report voluntarily disclosed isbased on not only the enterprises but also the auditors, that is to say, theprobability of the internal control attestation report is voluntarilydisclosed for both the enterprise’s motivation and the auditor’s willing.So the significance of this paper is that we hope to make the theory aboutthe enterprise voluntarily disclose and disclose high assurance extent ofthe report’s motive and from many angles to explore the voluntarydisclosure behavior be rich, and we hope to provide reference in practicallevel about the internal control system’s design, enterprise’s voluntarilydisclose behavior and auditor’s right choose for audit tactics. This paper’sresearch method is in the literature review we use the method ofcombining the qualitative method and quantitative method; in the report data we use the method of the audit theoretical research method’s archivalresearch method; in the empirical analysis we use the method of the audittheoretical research method’s statistical analysis. This paper’s maincontent is based on the file data of2010and2011, the conflicts theory,the signaling theory, the reputation mechanism theory and the auditor’schoice of reporting tactics theory, from both enterprises’ incentives andaudit tactics sides explore the enterprise’s general economic motivationand when the internal control attestation report is provided by anindependent third party, the disclosing party and the provider’s impactfactor and behavioral characteristic. Based on the analysis from thetheory and the file data, we find that the objective of lowering agencyconflicts, signaling and getting higher reputation are the key incentives tomake managers disclose and promote the quality of the internal controlattestation report. The separation of the two rights, the actual controller’sproportion of the cash flow rights, the manager’s proportion ofshareholding, the enterprise’s refinancing needs, the quality of internalcontrol, the board of director’s independence and the enterprise’sreputation have the significant relationship with the internal controlattestation report’s be disclosed and the quality of being disclosed. Theauditors are willing to audit and promote the quality of auditing on theinternal control attestation report for such reasons: the enterprise has thehigh separation of the two rights, the actual controller has the high proportion of the cash flow rights, the management has the highproportion of shareholding, the enterprise has the refinancing needs andinternal control’s high quality, the director’s board has the highindependence and the enterprise has the higher reputation. And at thesame time, the data can also show that the auditors have the choice ofreporting tactics on the internal control attestation report.